Fostering University Industry Relations

Kazuyuki Motohashi

Department of Technology Management forInnovation (TMI) University of Tokyo

& Research Institute of Economy, Trade andIndustry (RIETI)

http://www.mo.t.u-tokyo.ac.jp/

2

Outline of Lecture

• What is “Open Innovation”? And why is it relevantto technology transfer (from university)management?

• Survey of open innovation trends: a case of Japan(RIETI Survey on R&D collaboration)

• Understanding firm’s motivation for R&Dcollaboration

• Technology management strategy in openinnovation era: industry variation

Open Innovation

“Open innovation is a paradigm that assumes that firms canand should use external ideas as well as internal ideas, andinternal and external paths to market, as the firms look toadvance their technology” (Henry Chesbrough, UC Berkley)

Related Concept� R&D collaboration, Joint venture, Licensing

� Technology market (via intellectual property right)

� Technology sourcing (via open market)

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4

What drives the trend from internal R&D toopen innovation?

• Globalization and intense innovation competition:Catching up and growing importance of emergingeconomies (such as BRICs)

• Necessity of innovation speed in order toappropriate rents from R&D

• Importance of scientific knowledge for industrialinnovation: particularly the case for bio-pharmaceuticals

• Institutional changes in science sector: PRIs andnational university reforms (such as US in 1980’s,Europe and Japan in 1990’s)

Implications for Technology LicensingManagement in University

• Very welcome!

• But it is important to understand the firm’sincentives for acquiring external technology(management of “boundary of firm”)– Changing firm’s needs for university technology

– Technology management strategy depends on towhat extent your counterpart well manages openinnovation

– The style of open innovation movement is quiteheterogeneous and substantially different acrosstechnology fields 5

High concentration of R&D activities

ToyotaHonda

Panasonic

Sony

Nissan

Takeda

Hitachi

Toshiba

Cannon

NEC

DensoNTT

FujitsuSharpFuji film

DaiichiSankyo

AstellasEisai

MitsubishiElec.

MitsubishiChem.

Others

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Japan’s national innovation system

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RIETI’s Survey on R&D Collaboration

• Firm level survey on external R&D collaboration: businessto business networks and university and industry linkages

• Data for 2003, 556 samples

• Survey items– Recent trend of external R&D collaboration and IPR licensing

– Factors behind R&D collaboration decision

– Managing the boundary of firm in R&D, internal R&D vsoutsourcing

• Detail results are found as the following sitehttp://www.rieti.go.jp/jp/projects/innovation-system/H15.html

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Japanese system is changing?From RIETI surveyCollaboration with Large firms

12.2

13.0

24.4

38.8

46.0

68.1

11.6

5.6

6.1

2.3

12.8

4.3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 orunder

21-100

101-300

301-1000

1001-2000

2001 orover

5 year s ago

Pr es ent ( i ncr eas ed)

Collaboration with smallfirms

14.9

11.0

16.5

25.2

22.0

51.4

4.2

5.7

4.1

10.3

13.3

5.2

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 orunder

21-100

101-300

301-1000

1001-2000

2001 orover

5 year s ago

Pr es ent ( i ncr eas ed)

Collaboratio with universities

23.0

21.0

27.6

46.6

54.0

81.9

10.4

15.3

14.4

9.5

20.5

1.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 orunder

21-100

101-300

301-1000

1001-2000

2001 orover

5 year s ago

Pr es ent ( i ncr eas ed)

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Understanding UIC activities

Fig. 2 Style of collaboration with university

0% 10% 20% 30% 40% 50% 60% 70% 80%

Use of patent

R&D service(eg. Testing)

Technology transfer

Training

Technology consulting

Research Grant

Contract research

Joint R&D

100 or less

101-300

300-1000

1000 or over

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Factors behind R&D outsourcingReasons why increasing R&D collaboration

67.9

38.1

41.8

14.9

2.2

29.9

8.2

3.0

59.6

27.2

55.1

21.3

16.9

2.91.5

48.5

60.3

41.2

29.9

5.9

51.448.6

36.7

5.5

9.76.7

2.9

11.0

3.7

24.5

8.3

5.94.4

2.0

24.8

10.1

6.46.4 5.5

29.4

0%

10%

20%

30%

40%

50%

60%

70%

Respond

tointense

R&

Dcom

petition

Upgrade

own

basictechnologycapability

Costreduction

ofR&

D

Needs

toaccess

tobasic

science

Policypush

forindustry-science

linkage

Shortageof

R&

Dfund

byow

n

Upgrading

technologyleve

ofcounterparts

Success

inpast

collaborationprojects

Importantfortechnology

standard

Easy

toaccess

counterpartinformation

Large firms

Small firms

Universities

PRIs

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Management of firm’s boundary in R&D

72.0

5.9

31.3

7.9

64.1

13.5

5.9

47.6

16.9

6.7 7.1

18.7

37.7

47.0

4.9

16.2

20.5

5.9

51.2 52.8

10.6

30.3

3.3

32.4

29.332.9

2.2

20.2

5.5

9.3

32.2

28.4

2.2

8.3

46.5

2.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

ProductD

evelopment

project

New

R&

Dsubject

R&

Drelated

tocore

technology

R&

Dneeding

speed

Technology

frontierproject

Core

technology

Basic

science

Costreduction

project

Learning

technologyOwn R&D

With large firms

With smallfirms

With university

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Motivation and underlining hypothesesfor econometric analysis

• Factors behing external R&D collaboration– Intense innovation competition?– Increasing complexity of innovation and the role of

scientific knowledge– Selection and concentration of R&D projects, but it

needs wider technological scope

• UIC’s impacts on research and productionproductivity: greater impact for small firms– Less Not-Invented-Here Syndrome– Focusing on more concrete project (short term benefit)

and greater pressure for commercialization

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Business Environment Change Related toR&D Strategy

4.5

11.5

11.9

16.7

22.3

29.5

37.9

59.2

66.9

0% 10% 20% 30% 40% 50% 60% 70%

Meetmarketneeds

Shoten lead time

Explore new R&D theme

Focus R&D themes

Costreduction

Commercialize own tech seeds

Shiftto applied R&D

Upgrade basic R&D skills

Staffreduction

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Collaboration and R&D strategy

�@�@�@large firms SME and startups �@�@UniversitiesSME LF SME LF SME LF

Shorter development lead time ++ ++Focusing R&D theme -- ++

Reduce R&D cost +Reduce R&D staffs

Explore new technology seeds +++ ++more R&D for application and

development project++ ++

Improving basic technology capability --Market needs for R&D

Commercialization of tech seeds ++ ++ +

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UIC contents by firm size

Smaller firms collaborate with universities for developmentstage project, while larger firms prefer more fundamentaloriented research projects

� � � � � �� � �� � �� � � �� � � � � � �

19.4

13.5

5.4

3.0

10.3

61.3

56.8

51.8

43.9

28.2

37.5

12.9

16.2

32.1

34.8

43.6

43.8

9.1

10.3

9.4

5.4

7.1

9.1

7.7

9.4

8.1

3.2

3.6

3.2

0% 20% 40% 60% 80% 100%

20� � �

21� 100�

101� 300�

301� 1000�

1001� 2000�

2001� � �

1��� ������� ����� 10���� ���� ���������

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all all -1950 1951-70 1971-(1) (2) (4) (5) (6)

lrd 0.276 0.260 0.434 0.183 0.109(7.81)** (7.19)** (5.61)** (3.05)** (2.29)*

lemp 0.250 0.246 0.397 0.315 0.131(6.08)** (5.41)** (3.72)** (3.30)** (2.84)**

cord -0.030 -0.056 -0.131 0.146 -0.169(0.23) (0.45) (0.53) (0.67) (1.06)

univ1 0.377 0.355 0.203 -0.077 0.348(3.21)** (3.05)** (0.95) (0.33) (2.09)*

lage -2.402(4.81)**

lage2 0.360(4.86)**

Constant -1.683 2.302 -4.257 -1.188 0.439(7.10)** (2.57)* (8.51)** (2.83)** (1.30)

Industry Dummies yes yes yes yes yesObservations 450 438 168 134 136R-squared 0.62 0.64 0.77 0.55 0.49Absolute value of t statistics in parentheses* significant at 5%; ** significant at 1%

Research Productivity by Firm Age

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Scientific knowledge and fundamental science atuniversities and PRIs

Commercialization ofnew product

Research Lab.

Business developmentSMEs

Start-ups

Large firm

Commercialization ofnew product

Difference between large firms and SMEsin university industry collaboration activities

Close

tothe

market

Scope of UICScope of UIC

Role of UIC in economicdevelopment : a case of PRC

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IT infrastructure(internet etc.) IPR PolicyLabor market institutions

Product marketcompetition

Financial marketcondition

Firm’s innovativecapability and networks

Universities Public research inst.

Spin-out firms

Innovations

Patent application by type

20Motohashi, 2008

Share of UIC patents by technology

21Motohashi, 2008

Regional Cluster PolicyA Case of Hsinchu Science Industrial Park (HSIP) in Taiwan

ITRI Universities

HSIP Internal Technology

Externality

Silicon Valley

Regional Proximity

International Human capital mobility

(Yang, Motohashi and Chen (2008)

Conclusion

• Growing trend of open innovation leads toincreasing importance of UIC activities anduniversity’s IP management.

• UIC activities spur SME innovation and networkstyle innovation system.

• The role of university in NIS is important fordeveloping countries, where technology level atprivate sector is relatively low.

• Technology development strategy at PRIs (publicresearch institutions) is also important intechnological catching up

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